DraftKings, Former Exec Talk Settlement in Marathon Legal Battle

The long-running legal battle between DraftKings and a former executive could be nearing an armistice. 

Attorneys for Michael Hermalyn and DraftKings noted in a Tuesday court filing that the two sides “are negotiating a potential resolution” of a federal lawsuit that began days after Hermalyn left for Fanatics Sportsbook in February.

DraftKings sought and won an injunction that hamstrung Hermalyn’s day-to-day duties at Fanatics earlier this year, though Hermalyn is expecting his first victory in the bicoastal legal battle over the enforcement of his non-compete agreement as part of a separate case in California.  

U.S. District Court Judge Julia Kobick granted a request Tuesday from Hermalyn and DraftKings to stay proceedings in the federal case until Nov. 20, a day after a scheduled one-day trial in Los Angeles as Hermalyn seeks to get his one-year non-compete invalidated sooner than its Feb. 1, 2025, expiration date. L.A. County Superior Court Judge Tony L. Richardson noted in a court filing in the case that Hermalyn was “likely to prevail on the merits.”

DraftKings and a spokesperson for Hermalyn declined comment when reached about the potential settlement. 

Hermalyn moved from New Jersey to Southern California right before his Feb. 1 resignation from DraftKings as he sought to take advantage of the state’s strong laws against non-competes, even those entered into in other states. A victory for Hermalyn at the short trial next month wouldn’t trump Kobick’s injunction, but Hermalyn’s lawyers could use it in an attempt to cut a few months off Hermalyn’s current job restrictions that prevents him from associating with any current or former DraftKings customers. 

A settlement would also halt the hundreds of thousands of dollars in legal fees already paid in the case. Two weeks after Hermalyn’s resignation, one of his attorneys noted in a court filing that Hermalyn had racked up nearly $276,000 in legal fees—and the meter continued to run for both Hermalyn and DraftKings over the next eight months. 

DraftKings alleged in its lawsuit that Hermalyn hatched “a secret plan” to steal the betting giant’s “customer and business relationships” and use the “confidential information” to aid Fanatics Sportsbook, which seeks to establish itself as a major player in the legalized sports betting marketplace. 

As the legal battle kicked up days before the last Super Bowl, Hermalyn said he was “shocked and disappointed” that DraftKings would make “completely false and fabricated accusations” in DraftKings’ bid to keep him from working at Fanatics Sportsbook in any capacity.